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TMI Blog2023 (1) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... cieties Registration Act the applicability of maximum marginal rates u/s 167B of the Act would not arise.
Thus hold that the provisions of section 167B have no application to the Assessee and the income of the assessee cannot be taxed at maximum marginal rates. X X X X Extracts X X X X X X X X Extracts X X X X ..... ting for benefit of the members. The matter reached before the Tribunal and the Tribunal in ITA No. 6141/2016 dated 12.04.2017 restored the issues to the file of the Assessing Officer with the following observations: "5. The Ld. CIT(Appeals) held that the assessee is to be taxed as AOP because AJP is only to be deemed have an existence only where does not covered in any other clauses of section 2(31). Before us the only limited point made by the Id. counsel Ms. Sumangala Saxena is that the Id. Assessing Officer while applying the maximum marginal rate after invoking provision of section 167B has failed to consider the fact that under the said provision itself, exception has been carved out for Societies Registration Act 1860. Thus, even i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that the only falls limited purposes the matter is set aside to the file of the Assessing Officer to examine the applicability of section 167B in the case of the assessee accordingly to decide the issue in accordance with the law." 4. Upon restoring the matter to the file of the Assessing Officer made consequential assessment on 28.08.2017. The Assessing Officer once again brought to tax the interest income as was done while completing the assessment under section 143(3) of the Act. However, the Assessing Officer applied the tax rates as applicable for the cooperative societies. The assessee once again filed appeal before the learned CIT(Appeals) contending that assessee is a mutual benefit society which was though accepted by the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicability of the provisions of Section 167B of the Act the ld. Counsel for the assessee placing reliance on the decisions of the Hyderabad Bench of the ITAT in the case of KMR Education Society vs. ACIT [68 SOT 163] submits that once the assessee is registered under the Societies Registration Act, 1860 the provisions of Section 167B are not attracted. Ld. Counsel also placed reliance on the decisions of the Visakhapatnam Bench of the Tribunal in the case of Vidyodaya Educational Society vs. DCIT in ITA No. 369/Vizag/2016 dated 26.04.2018 and M/s Anand Educational Society vs. ITO in ITA No. 67/Vizag/2018 dated 05.09.2018 in support of the above contention. 7. On the other hand, the ld. Departmental Representative ("Ld. DR") submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 167B of the Act would not arise. While holding so, the Tribunal observed as under: "5. We have heard both the parties and perused the material placed on record. Though the Ld.CIT(A) held that the maximum marginal rate is applicable in the case of the assessee, who is having exempt income as well as taxable income, but there is no such distinction provided under section 167B of the Act. This Tribunal in the case cited supra held that normal rates are applicable in the case of the Society registered under Societies Act. For the sake of clarity and convenience, we extract relevant part of the order of this Tribunal in para No. 10-11 which reads as under: 10. The next submission of the assessee is taxing the income at maximum marginal rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT was of the opinion that the A.O. ought to have applied maximum marginal rate of tax to the income of the society. But, the fact is that once the society is registered under the Societies Registration Act, the applicability of maximum marginal rate does not arise, it is because the societies are registered under the Societies Registration Act are prohibited from distribution of any surplus to its members. Once the distribution of profit to its members is prohibited, the question of determination of share of each individual member does not arise. Hence, the CIT was not correct in coming to the conclusion that the rate of tax applicable to the assessee is maximum marginal rate of tax without understanding the provisions." 11. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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